| base year | Year in which the market basket is established and year to which all other prices are compared.
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| business cycle | Regular patter of ups and downs in the economy
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| Consumer Price Index (CPI) | The price index based on what average consumers buy.
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| cost of living adjustment (COLA) | A device that compensates people for the fact that changes in inflation change the spending power of their income.
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| cyclical unemployment | State that exists when people lose their jobs because of a temporary downturn in the economy.
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| depression | Severe recession typically resulting in a financial panic and bank closures, unemployment rates exceeding 20 percent, prolonged retrenchment in RGDP on the magnitude of 10 percent or more, and significant deflation.
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| discouraged-worker effect | Bad news induced people to stop looking for work, causing the unemployment rate to fall.
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| encouraged-worker effect | Good news induces people to start looking for work, causing the unemployment rate to rise (until they succeed in finding work).
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| expansion | The part of the growth period of the new business cycle from the previous peak to the new peak.
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| frictional unemployment | Short-term unemployment during a transition to an equal or better job.
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| GDP deflator (GDPDEF) | The price index used to adjust GDP for inflation, including all goods rather than a market basket.
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| gross domestic product (GDP) | The dollar value of all of the goods and services produced for final sale in the United States in a year.
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| inflation rate | The percentage increase in the consumer price index.
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| macroeconomics | That part of the discipline of economics that deals with the economy as a whole.
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| market basket | Those goods that average people buy and the quantities they buy them in.
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| microeconomics | That part of the discipline of economics that deals with individual markets and firms.
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| peak | The highest point in the business cycle.
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| price index | A device that centers the price of the market basket around 100.
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| price of the market basket in the base year | National average of the total cost of the market basket for the first month in the fiscal year.
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| real gross domestic product (RGDP) | An inflation-adjusted measure of GDP.
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| recession | The declining period of at least two consecutive quarters in the business cycle.
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| recovery | The part of the growth period of the business cycle from the trough to the previous peak.
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| seasonal unemployment | A subset of cyclical unemployment that exists when people lose their jobs predictably every year at the same time.
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| structural unemployment | State that exists when people lose their jobs because of a change in the economy that makes their particular skill obsolete.
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| trough | The lowest point in the business cycle.
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| underemployment | The state of working significantly below skill level or working fewer hours than desired.
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| unemployment rate | The percentage of people in the work force who do not have jobs and are actively seeking them.
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| work force | All those nonmilitary personnel who are over 16 and are employed or are unemployed and actively seeking employment.
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2003 McGraw-Hill Higher Education